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HomeMy WebLinkAboutEnergy Board - Minutes - 06/10/2021 ENERGY BOARD REGULAR MEETING June 10, 2021 – 5:30 pm Remote – Zoom Meeting ROLL CALL Board Members Present: Jeremy Giovando, Bill Becker, Alan Braslau, Marge Moore, Steve Tenbrink, Sue McFaddin, Dan Gould, John Fassler Board Members Absent: OTHERS PRESENT Staff Members Present: Adam Bromley, Christie Fredrickson, Cyril Vidergar, Tim McCollough, Theresa Connor, Poorva Bedge, Kent Coldsnow Platte River Power Authority: Trista Fugate, Wade Hancock, Dave Smalley, Shelley Nywall Members of the Public: Rick Coen, TJ Loran MEETING CALLED TO ORDER Chairperson Becker called the meeting to order at 5:30 pm PUBLIC COMMENT None APPROVAL OF MINUTES In preparation for the meeting, board members submitted amendments via email for the May 13, 2021, minutes. The minutes were approved as amended. ANNOUNCEMENTS & AGENDA CHANGES The Energy Board will continue to meet remotely, pursuant to Ordinance No. 79, 2020. STAFF REPORTS (attachments available upon request) Executive Director’s Update Theresa Connor, Interim Utilities Executive Director Ms. Connor gave a brief update on the renovations taking place at the Utilities Service Center. The renovation includes a remodel of the Supervisory Control Operations (SCO) room, as well as the addition of a Network Operations Center (NOC) for Connexion staff. The physical construction is 95% complete, and staff should be able to move back into the building by the end of August. Light & Power staff recently completed conduit proofing for Connexion staff. L&P staff also completed an overhead to underground conversion project in the Milfred Subdivision (off Taft Hill between Horsetooth and Drake), which brings the City to 99.8% underground infrastructure. ENERGY BOARD REGULAR MEETING The billing system project is currently in a reduced activity phase. The project was to be delivered through Open SmartFlex (OSF), but the City is currently in dispute on the contract so the project will be delayed. Staff remains focused on prioritizing, planning, and executing identified gaps within the live production of the OSF software that supports the Connexion service area. The recruitment for the new Utility Director will begin this month. Chairperson Becker asked if the Board will be able to participate in the hiring of the new Utilities Executive Director and mentioned this had been requested multiple previous times without commitment or action. Ms. Connor said there is always a public and community engagement process, so she expects the Board will be able to participate in some fashion. Board member Braslau said the problems with the billing system were foreseen, he wondered how much of the cost Fort Collins Utilities is carrying (as opposed to Connexion) resulting from the mismanagement of this project. Ms. Connor said there is a cost share between Utilities and Connexion, but she can’t say much more while they are in the middle of working through the dispute. PLATTE RIVER WHOLESALE RATE UPDATE Wade Hancock, Platte River Power Authority (attachments available upon request) Mr. Hancock said the latest long-term rate projections (the next 10 years), indicate a 3.2% annual rate increases from 2022-2026, followed by 2.9% increases from 2027-2030, and then 1.2% in 2031. Platte River staff did not request formal action regarding the rates, but they were seeking feedback on the rates at the Platte River Board of Directors meeting in May. Mr. Hancock reminded the Energy Board that the Platte River Board adopts rates for the following year, and rates are reviewed at least annually; so, while the projections show the 10-year planning horizon, everything beyond 2022 serves as an indication only based on current assumptions. Over the next few months, Platte River staff will begin developing the budget which will be used to develop the 2022 charges, which will be brought to the Platte River board in August. In 2020, Platte River transitioned to the current rate structure, which the board adopted following the rate strategy and rate design study. As part of the study, the rate setting reference document established the following objectives: Improve value added of Platte River in support of owner communities, offer a desirable portfolio of services and rates that meet owner communities’ needs, better align wholesale time- of-use pricing signals with cost of service and owner community retail pricing signals, and send pricing signals that result in system benefits. Several years ago, Platte River completed a comprehensive review of its rate making practices to recognize and address the significant changes occurring in the electric industry. The study was a two- phased approach. The first phase was to establish Platte River’s rate setting philosophy. Work sessions were held with the Platte River Board and owner community staff, and they were facilitated by Platte River and their rates consultant, NewGen Strategies & Solutions. The Platte River Board adopted the Rate Setting Policy in 2018. Accompanying the Rate Setting Policy is the Rate Setting Reference document, which details Platte River’s rate setting goals and guiding principles to achieve those goals. The second phase of the study was establishing rates and charges that support the rate setting objectives. The adoption of the 2020 rate tariff schedules completed the second phase by implementing a ENERGY BOARD REGULAR MEETING rates framework that was more transparent and flexible, all while providing a system benefit. Since last year, the rate projections through 2031 have increased approximately 4%. Mr. Hancock said that is primarily due lower assumed surplus sales revenue (due to anticipated lower regional prices as renewable generation increases), as well as increases for projected Xcel ancillary services, depreciation, and annual staffing additions. The sensitivities have greater volatility in the near term. Coal plant retirements will provide rate relief due to lower fuel and production O&M expenses (which includes staffing at Rawhide), as well as depreciation because investments into the facilities is decreased due to plant closures. Other items providing rate relief are increased owner community revenue from load growth, interest expense and income. Simultaneously, coal plant retirements are also one of the greatest rate pressures. Kilowatt hours sold to the owner communities formerly provided by coal plants, are now being replaced by solar, wind, natural gas combustion turbine generation, and market purchases. Other pressures include inflation, staffing additions, DER investment expansions, etc. Modeling uncertainties can include things like, coal inventory sales, commodity prices, decommissioning, load forecasts, organized energy markets, COVID-19, Integrated Resource Plans (which will be revisited two more times before 2031), etc. Mr. Hancock noted that many uncertainties items are highly correlated. Based on year-end 2019 data, Platte River’s average wholesale rate is 18% lower than the next lowest regional provider (Tri State). 2020 year-end data is not yet available. CAMU’s (Colorado Association of Municipal Utilities) January 2021 retail rate surveys indicate Platte River’s wholesale rates allow the owner communities the opportunity to offer competitive rates. Platte River staff identified several key takeaways from the 2020 rate structure. Mr. Hancock pointed out the minimum billing demand stabilized revenues; Demand loads in 2020 varied from budget 3.5% while demand revenues varied 0.4%. Minimum billing demand also emphasizes the efficient use of infrastructure to maximize short-term and long-term marginal cost savings. Mr. Hancock said staff is also proud of the transparency in unbundled energy charges for dispatchable fixed and variable costs, as well as dispatchable and intermittent (wind and solar). Variable costs increase transparency and allow for greater pricing flexibility at retail. Board member Tenbrink wondered if other neighboring states’ (Utah, Wyoming, New Mexico) rates could also be used in comparison. Mr. Hancock said that is a great action item of things to begin exploring. Board member McFaddin noted that Holy Cross and Tri-State are dropping ratepayer prices in tandem with the price drop in renewable energy. She wondered if Platte River updates their model before 2024, if the prices would also reflect that. Mr. Hancock said Platte River staff will continue to update their modeling assumptions as they receive the data. Mr. Smalley added that in comparing Platte River to Tri- State, it’s important to look beyond what they’re doing with short-term rates. Platte River is shutting down a very efficient unit in Rawhide, as opposed to Tri-State’s closings of less efficient units—it’s more economical for them to do that. Chairperson Becker asked for clarification on the minimum billing demand. Mr. Hancock explained the minimum billing demand, also known as a ratchet, essentially establishes a floor. The revenue requirement remains unchanged but concentrating when to signal to get off the peak, so it lowers the bill in all the other (non-peak) months as well. INTERCONNECTION STANDARDS Kent Coldsnow, Electrical Engineer I, Utilities Light & Power (attachments available upon request) ENERGY BOARD REGULAR MEETING Interconnection Standards are technical requirements for all Distributed Energy Resources (DER) connected to Fort Collins Utility’s distribution system. A DER system is any electric power source that is capable of exporting; the most prevalent is Solar, but DERs are also inclusive any kind of generator, like batteries, wind, and hydropower. The two main purposes of interconnection standards are safety and reliability. These standards ensure DER systems have adequate protection and safety devices to provide protection for Utilities workers, customers, the public, and the distribution system, as well as ensuring any DER systems will not affect the Utility’s distribution system’s reliability. The Utility’s current active standards were published in July of 2011, and since then, both the Utility and the industry have learned a significant amount about DERs. In 2011, the Utility had 120 DER connected systems, and today there are about 2,200 connected systems. The industry standard for interconnections is outlined in IEEE Standard 1547, which is the standard for interconnection and interoperability of DER with associated electric power system interfaces. This standard was last updated in 2018, and that was the first update since it was first written in 2003. IEEE 1547 has categories for performance requirements: Reactive Power Voltage Regulation Performance (Category A and Category B), and Abnormal Conditional Response (Category I, II, or III). Under Reactive Power Voltage Regulation, Category A covers minimum performance capabilities needed for voltage regulation. This is adequate for applications where DER penetration is lower and where DER output is not subject to frequent, large variations. Category B includes all the same requirements of Category A and supplemental capabilities needed where DER penetrations are higher and subject to frequent, large variations. Under Abnormal Conditional Response, Category I is based on minimum bulk power system (BPS) reliability needs. Category II requirements will cover all BPS reliability needs in Category I, as well as additional voltage ride-through capabilities. Category III provides the highest disturbance ride-through capabilities and addresses power quality and overloads caused by tripping DER in areas with very high levels of DER penetration. The Utility used IEE1547 to help create and update their own interconnection standards. The operational and protection standards were reorganized into two main categories: Category A1 (combining IEEE 1547’s Category A and Category I requirements, and Category B2 (combining IEEE 1547’s Category B and Category II requirements). Category A1 covers the following systems: engine and turbine driven synchronous generators, synchronous hydro-generators, and other synchronous generators (excluding wind turbines). Category B2 covers the following systems: inverters sourced by solar PV, energy storage, fuel cells, or other applications, all types of wind turbines, induction generators, and doubly fed induction generators. The Utility previously had 10 different protection requirement categories, several of which were never applicable in the ten years the standard has been active. Under the new standards, the categories were simplified to Category A1 and Category B2 (non-inverter DER and interconnected DER). The Utility maintains voltage and frequency limits, including shall-trip limits for when the voltage or frequency is too far outside of normal ranges. There are also ride-through ranges, where the DER has different responses other than tripping, which are dependent on the severity on the variation and length of time. There are ranges of mandatory, permissive, and cease to energize responses. Some of the most noticeable changes to the standards were to the terms and drawings. The term ENERGY BOARD REGULAR MEETING generation facility was replaced with Distributed Energy Resource (DER) as it’s now an industry accepted term. Staff also expanded the definitions section to include new terms not used outside of utility engineering and better align with the 1547 standard. Staff believes this will lead to better understanding and compliance with the standard by developers and customers. There are also new and revised drawings to include additional information and more examples for Category A1, Category B2 Inverter DER, Category B2 Non-Inverter DER, and Category B2 Inverter DER with storage (with 5 different configurations). The Utility also made changes based on their own policies and experience. After an internal study, the hosting capacity limits were updated to 100% minimum annual daytime load on the circuit for solar, and 100% minimum annual load for all other DER. This significantly increased the amount of DER that could be connected to the Utility’s system. Additional changes that were made include: requiring inverters to be set to a constant power factor (PF) mode with unity PF (unless otherwise approved), open-phase condition should reiterate a required response and include commissioning test as an annex within the standard, and monitoring will be required on non-inverter projects greater than 100kW (and likely on projects greater than 250kW to align with new Platte River requirements). Chairperson Becker wondered if Mr. Coldsnow could provide some illustration as to why updating these standards matters as renewable penetration levels increase in Fort Collins. Mr. Coldsnow said as more DER systems are added to the system, the power flow from the substations will decrease and there will be a point when there is more DER on a circuit, and there will be a possibility of back-feeding into the substation. Mr. Coldsnow said as of now staff does not know what effects that will have but it is driving staff to perform the studies. Chairperson Becker noted it is probably also important that all these systems play nicely together to coordinate the variable renewables with controllable DER, and Mr. Coldsnow agreed. Board member McFaddin asked why, if the standard is a unity PF, is the CSU solar project with Namaste Solar required to do something different? Mr. Bromley said the unity PF is the Utility’s safe-spot with most generation and loads; however, that’s not how inductive-based loads work. With the CSU projects, the aggregate size of the PV systems together was much larger than the typical limit and went above the hosting capacity limit. This triggered Utility staff to perform a system impact study, which prompted staff to ask CSU to change the power factor setting on many of the inverters to stay within some of the parameters that the Utility has for power factor levels. Chairperson Becker asked how the Utility will balance the equity of investing in new technology (when it’s expensive to do so) and capacity limits once it becomes more accessible to a larger group of people. Mr. Coldsnow explained that though these limits are the current policy, that doesn’t mean they can’t be changed as the industry and the Utility learn more. Mr. Bromley noted it’s important to remember that these requirements are not set in stone forever, and they will be revised and updated with time and data. Board member Gould wondered if there are stakeholders invested in this process who may have complaints, or what will the process be behind the scenes. Mr. Bromley said in most cases, this should be a positive change for customers and developers. There aren’t a lot of inverters out there that aren’t meeting the requirements, so from an economic standpoint there shouldn’t be a lot of issues with the changes that have been made. STAGGERED BOARD MEMBER TERMS ENERGY BOARD REGULAR MEETING Several members expressed concerned about the new term limits for Boards and Commissions: “A seven-member board will consist of 4 four-year terms, 2 two-year terms and 1 one-year term. A nine- member board will consist of 4 four-year terms, 3 two-year terms and 2 one-year terms. No board member will serve more than 8 consecutive years regardless of term length” Many Board members felt that single-year terms do not give new Board members adequate time to get acquainted with the Board’s goals and to make meaningful contributions to discussions and actions by the Board. Board member Fassler wondered if the Board may be over thinking this issue, he noted it is a good to provide flexibility for future recruits. The Board will compose a memo to their Council liaison expressing these concerns. SUMMER MEETING ATTENDANCE Board members McFaddin and Giovando will be absent for the July 8 meeting. Board members Moore, Fassler, and Gould (tentatively) will be absent for the August 12 meeting. The Board would like to meet in person beginning in July. Staff support will be touring the room next week to see what upgrades have been made to the space and see how a hybrid meeting might function should the need arise. BOARD MEMBER REPORTS Several Board members spoke at City Council expressing their concern around appointments to the Platte River Board of Directors. City Council ultimately appointed two Fort Collins City Council members, including Mayor Arndt, to fill the seats on the Platte River board. Board member McFaddin referenced an article in the Coloradoan detailing a potential project to convert two hotels on Harmony Road to affordable housing units. She said a large obstacle to convert the rooms to units is apparently the current metering structure (one meter for the whole building as opposed to individual meters). Mr. Bromley said master metering is complex and balancing the social economics of that situation is challenging. The Board would like to discuss this issue more thoroughly at a future meeting. FUTURE AGENDA REVIEW The Board would like to add master metering standards to their planning calendar. The Board would also like to spend time at their next meeting identifying and highlighting their energy priorities as a board and then package and present them to City Council. Each Board member will send a list of their top 10 priorities to Ms. Fredrickson, and she will cross reference each of the lists and compile a common list before the next meeting. ADJOURNMENT The Energy Board adjourned at 8:08 pm.